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Fisheries Sector Revenue Audit Service Sierra Leone PERFORMANCE AUDIT REPORT ON GENERATION AND COLLECTION OF REVENUE IN THE FISHERIES SECTOR September 2012 TABLE OF CONTENTS FOREWORD EXECUTIVE SUMMARY 1 Introduction 1.1 Purpose and Scope 1.2 Methods and Implementation 2 Generation and Collection of Revenue 2.1 Overview of the Fisheries sector 2.2 Regulatory Framework 2.3 Fishing Facilities 2.4 Artisanal fishing vessels9 2.5 Semi industrial fishing vessels 2.6 Industrial fishing sector 2.7 Vision and Policy objectives 2.8 MFMR’s Generation and Collection of Revenue 2.9 Revenue collected by Local Councils 2.10 Organisational structure of MFMR 2.11 Resources 2.12 Control of Illegal, Unreported and Unregulated (IUU) Fishing 2.13 Recent Developments 3 Findings 3.1 Poor monitoring of fish revenue collection 3.1.1 No monitoring of fishing activities by M&E Officers 3.1.2 Poor Record Keeping 3.1.3 Coastal councils unable to meet their revenue targets 3.2 Fisheries observers facing various obstacles 3.3 The navy was not able to effectively control EEZ. 3.4 Poor implementation of fishing standards 3.4.1 Inadequate standards of fish landing sites. 3.4.2 Lack of recommended fishing gear 4 Conclusions 4.1 Loss of revenue as a result of poor reporting and monitoring 4.2 Inadequate control over the Marine areas 4.3 Fishing standards not effectively imposed 5 Recommendations 5.1 Finalise drafting of new acts and regulations 5.2 Councils should improve revenue collection 5.3 Promote independence of fisheries observers 5.4 Intensify the fight against illegal fishing 5.5 Develop fish landing site and provide recommended fishing nets Appendix A List of Persons Interviewed Appendix B Roles and Responsibilities of Key Players Appendix C Organogram Appendix D Response from MFMR FOREWORD As the Supreme Audit Institution (SAI) of Sierra Leone, the Audit Service Sierra Leone (ASSL) is set on expanding the scope of external audit. In addition to our traditional role in Regularity Audit, we have established Performance Auditing as one of the services provided by ASSL. To achieve this, we have put in significant efforts into upgrading the professional skills in the organisation and modernising the audit methodology. In submitting this Performance Audit Report for tabling, I refer to the constitution of Sierra Leone in which Section 119 (2) states ‘‘The public accounts of Sierra Leone and of all public offices including the courts, the accounts of the central and local government administrations, of the Universities and public institutions of like nature, any statutory corporation, company or the body or organisation established by an Act of Parliament or statutory instrument or otherwise set up partly or wholly out of Public Funds, shall be audited and reported on by or on behalf of the Auditor General, and for that purpose the Auditor-General, or any person authorised or appointed in that behalf by the Auditor-General shall have access to all books, records, returns and other documents relating or relevant to those accounts’’. I further refer to the Government Budgeting and Accountability Act of 2005, Section 63 (1) Sub section (1e), which states ‘‘In his examination of the Final accounts the Auditor-General shall ascertain that in his opinion, financial business has been carried out with due regard to economy in relation to results achieved’’, and; Sub section 66 (4) further states that ‘‘Nothing in this section shall prevent the Auditor-General from submitting a special report for tabling in Parliament on matters that should not await disclosure in the annual report’’. In line with my mandate as described above, we have undertaken this Performance Audit on Generation and Collection of Revenue in the Fisheries sector by the Ministry of Fisheries and Marine Resources, assessing whether revenue is being generated and collected in line with the potential of the fishing sector. Lara Taylor-Pearce FCCA (Mrs.) Auditor General of Sierra Leone EXECUTIVE SUMMARY The Ministry of Fisheries and Marine Resources (MFMR) generates revenue for the country through collection of licence fees, royalties, transhipment fees, registration fees for fishing vessels, fines, fish processing establishment fees, fish discharge/landing fees and charges on exported fish. The Fisheries sector of Sierra Leone contributes about 10 percent to the Gross Domestic Product. However, over the years, this revenue sector has been unable to fully optimise its potentials and therefore has stimulated concerns amongst Sierra Leoneans such conditions therefore motivated a Performance audit to be conducted on the Ministry. The audit is based on the revenue generation and collection by MFMR and Local Councils operating in coastal districts around the country to which revenue generation in the artisanal fishing industry has been entrusted. During the course of the audit, we arrived at the following findings: The councils have not established and implemented adequate monitoring and controls over fish revenue collection , Fisheries observers on board the licensed vessels often find themselves in a weak position in relation to the captain of the ship when trying to enforce the correct fishing practices. Patrolling of Sierra Leone’s fishery waters has not been effective Monitoring of fishing activities by the Ministry has not ensured good fishing standards. In order to improve on this situation we recommend that the following issues be addressed: MFMR should approve and issue the new Fisheries Regulations as soon as possible and complete the drafting of a bill for the amendment of the 1994 Fisheries Act. The Local Councils should ensure that licensing fees are collected annually in accordance with pre-defined and sustainable tariffs. To facilitate this, databases with details of canoes, fees, revenue collected, etc should be developed and monitoring by M&E officers improved. To promote the independence of the fisheries observers, MFMR should ensure that their salaries are paid by them and not by the fishing companies. MFMR should also consider how back up support to the fisheries observers could be improved when captains do not want to obey the observers. MFMR should, together with the Maritime Wing of the Armed Forces, develop a comprehensive plan for effective surveillance of Sierra Leone’s fishery waters. The plan should take into account the need for patrolling with navy vessels as well as the cooperation with external players and the use of VMS, AIS, etc. 1 INTRODUCTION 1.0 Purpose and Scope Fishing provides employment opportunities for persons residing in the coastal communities of Sierra Leone. The fishing industry is a major contributor to the economy, contributing about 10 percent to the Gross Domestic Product. This audit was motivated by the fact that the country loses large amounts of money due to illegal fishing. The annual losses have been estimated to be approximately $30 million. This has stimulated concerns that the country is losing out on revenue and motivated this performance audit on the Ministry of Fisheries and Marine Resources (MFMR). The audit objective was to assess whether the programmes and activities of MFMR and its counterpart coastal councils, to improve Generation and Collection of Revenue in the fishing sector were successful. The focus of the audit was on determining if: MFMR and coastal councils have established and implemented adequate monitoring and controls over fish revenue collection; Fisheries observers have successfully performed their duties in accordance with the Fisheries Regulation; MFMR has effectively controlled Illegal, Unreported and Unregulated (IUU) fishing; and MFMR’s monitoring of fishing activities has ensured good fishing standards; 1.2 Methods and Implementation In order to meet the audit objective and arrive at an assessment of whether MFMR revenue generation was efficient and effective, the team selected major fishing stations and fish landing sites that are involved in artisanal fishing activities. These included Gbondape and Solima in the Pujehun District and Shenge and Tisana in the Moyamba District. In the case of industrial fishing activities, two fishing companies predominantly engaged in industrial fishing exercises were selected. These two companies, Okeky and Sierra Fishing companies account for an important part of Government`s revenue from fishing activities. To assess the effectiveness of MFMR, the team conducted interviews, reviewed documents and made physical observations. Documents were reviewed to obtain an understanding of the MFMR’s programmes and operations and to get an in-depth understanding of the management of revenue generation and collection. Document were also to confirm the information obtained during interviews and to source information not directly obtained through interviews. Key personnel at the headquarters in Freetown, other fisheries stakeholders and Council representatives were interviewed to obtain an understanding of the systems and operations of MFMR. See Appendix A for a list of persons interviewed. Physical observations were made to assess the state of fish landing sites and to be able to determine whether MFMR’s outstations were up to the fish processing standards prescribed in the Fishery Products Regulations of 2007. A draft version of this report was sent to MFMR for their comments. In their response dated 26 July 2012 MFMR clarifies some of the issues raised in the report. MFMR’s response is attached as Appendix D. 2 GENERATION AND COLLECTION OF REVENUE 2.1 Overview of the Fisheries sector The Sierra Leone Territorial waters are richly endowed in biodiversity with abundant species of tropical fish. Some 200 species have been identified in the country’s Exclusive Economic Zone (EEZ). About 80 of these species of fish have commercial value. The Government places a high priority on the fishing industry as a growth sector with a huge potential for contributing to food security, employment and fiscal returns. The fisheries sector contributes 10% of the country’s Gross Domestic Product (GDP) and fish is an important source of protein. It supplies about 80% of the total consumption of animal protein.
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